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Seed investment agreement
I need a seed investment agreement for an early-stage tech startup seeking NZD 500,000 in exchange for equity, with provisions for investor rights, a clear cap table, and a vesting schedule for founders. The agreement should also include a clause for follow-on investment rights and a non-disclosure agreement to protect proprietary information.
What is a Seed investment agreement?
A Seed investment agreement sets out the terms when early-stage investors put money into a startup company in exchange for shares. It's typically the first formal investment round after friends and family funding, with Kiwi startups often raising between $100,000 to $1 million at this stage.
The agreement covers key details like company valuation, share price, investor rights, and any special terms like board seats or veto powers. In New Zealand, these agreements usually follow templates from groups like the Angel Association NZ, making the process smoother for both founders and investors while ensuring compliance with the Companies Act and Financial Markets Conduct Act.
When should you use a Seed investment agreement?
Use a Seed investment agreement when your startup needs its first significant external funding beyond friends and family. This agreement becomes essential once you've found investors ready to inject capital锟斤拷锟絫ypically between $100,000 and $1 million锟斤拷锟絠n exchange for equity in your company.
The timing is crucial: implement this agreement before any money changes hands and while you still have negotiating leverage. Early-stage Kiwi companies often need this document when expanding their team, developing products, or entering new markets. It provides the legal framework to protect both founders and investors under New Zealand securities laws.
What are the different types of Seed investment agreement?
- Simple SAFE Agreement: Most common for early-stage Kiwi startups, offering straightforward terms with future equity conversion
- Priced Seed Round Agreement: Sets specific company valuation and share price upfront, with detailed investor rights
- Convertible Note Agreement: Structures the investment as a loan that converts to equity, popular with angel investors
- Multiple Investor Agreement: Designed for coordinating several investors in a single seed round, with standardized terms
- Strategic Investor Agreement: Includes additional provisions for investors bringing industry expertise or strategic value
Who should typically use a Seed investment agreement?
- Startup Founders: Create and sign the agreement, often working with lawyers to ensure terms protect the company's future
- Angel Investors: Review and negotiate terms before providing capital, typically investing $20,000 to $200,000 each
- Corporate Lawyers: Draft and review agreements, ensuring compliance with NZ securities laws and protecting client interests
- Company Directors: Approve and execute the agreement on behalf of the startup
- Investment Syndicates: Coordinate multiple investors under a single agreement, often led by experienced angel investors
How do you write a Seed investment agreement?
- Company Details: Gather accurate company registration info, shareholding structure, and current capitalization table
- Investment Terms: Determine valuation, share price, and investment amount for each investor
- Investor Information: Collect full legal names, addresses, and investment vehicle details for all participating parties
- Rights Package: Define specific investor rights, including board seats, veto powers, and information rights
- Compliance Check: Ensure alignment with NZ Financial Markets Conduct Act requirements and securities regulations
- Document Platform: Use our automated system to generate a legally sound agreement that includes all required elements
What should be included in a Seed investment agreement?
- Party Details: Full legal names, addresses, and registration numbers of the company and all investors
- Investment Terms: Precise share price, number of shares, total investment amount, and payment conditions
- Warranties: Company representations about its financial position, assets, and legal status
- Shareholder Rights: Voting powers, board representation, pre-emptive rights, and tag-along provisions
- Exit Provisions: Terms for future sales, IPOs, or company wind-up scenarios
- Governing Law: Explicit statement of New Zealand jurisdiction and applicable securities regulations
- Execution Block: Proper signature sections for all parties, including witness requirements
What's the difference between a Seed investment agreement and a Pre-seed Angel investment agreement?
A Seed investment agreement differs significantly from a Pre-seed Angel investment agreement in several key aspects, though both involve early-stage funding. Understanding these differences helps you choose the right agreement for your startup's current stage.
- Investment Size: Seed rounds typically involve $100,000 to $1 million, while pre-seed deals are usually smaller, ranging from $10,000 to $100,000
- Company Stage: Pre-seed agreements suit very early companies with minimal validation, while seed agreements work for startups with some traction and clearer valuations
- Legal Complexity: Seed agreements contain more detailed investor rights and protections, reflecting the larger investment amounts and increased stakeholder complexity
- Due Diligence: Seed rounds require more extensive company documentation and formal due diligence processes than pre-seed deals
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